Bitcoin remains locked in a deep undervaluation phase after five straight months below major on-chain cost benchmarks, with selling by long-term holders still limiting any durable recovery.
The cryptocurrency was recently trading around $64,400, well under its realized market mean of about $76,600 and below the short-term holder cost basis of roughly $72,200. Market data suggests that conditions often associated with a bottom are developing, but confirmation of a sustained reversal has not yet appeared.
Glassnode analysts said the market structure has become more mature from a bottoming perspective, yet the latest data still points to unresolved selling pressure. Long-term holders now account for 43% of total realized on-chain losses, while one recent daily realized-loss reading reached $280 million, the highest level since December 2022.
That selling wave is the central issue for Bitcoin’s near-term direction. Although prices are deeply discounted compared with average on-chain cost levels, long-term holders have not yet shown a clear and lasting reduction in realized losses. Until that pressure fades, analysts say Bitcoin may struggle to reclaim key levels above the low-$70,000 range.
Spot Bitcoin ETF activity also remains weak. Net monthly flows are still negative, even though daily outflows have eased from a June peak of $193 million to about $88.9 million. Trading volumes in spot Bitcoin ETFs now stand between $650 million and $950 million a day, about 80% below the peak levels recorded in October 2025. The decline points to muted institutional participation at a time when Bitcoin needs stronger demand to sustain a recovery.
In derivatives markets, the picture is more balanced. Positioning has turned somewhat more optimistic, with the put-to-call open interest ratio falling to 0.56, its lowest level of 2026. Perpetual futures funding rates remain close to neutral at around 0.01%, showing that leverage is not heavily tilted in either direction. Still, options pricing continues to show a premium for downside protection, indicating that traders remain cautious even as Bitcoin stabilizes.
Macroeconomic pressures are also complicating the outlook. West Texas Intermediate crude oil rose 7.9% over seven trading sessions after reports that a U.S.-Iran memorandum of understanding had expired. The rise in oil prices weighed on global risk assets, including equities and cryptocurrency markets. Bitcoin’s weekly gain had reached 9.4% before fading to around 5%, while major equity benchmarks, including the S&P 500 and European indexes, ended the week lower.
The broader liquidity backdrop is mixed. U.S. broad money supply, known as M2, has reached a record $22.8 trillion, a condition that usually supports risk appetite. But the Federal Reserve’s balance sheet remains about $2 trillion smaller than its 2023 peak, and real interest rates are still near 1%. That combination leaves markets pulled between expanding money supply and restrictive monetary policy.
For Bitcoin, the result is a market without a clear macro driver. Liquidity is not tight enough to fully suppress risk assets, but it is not loose enough to produce a broad surge in speculative demand. That has placed greater importance on on-chain signals, especially the behavior of long-term holders.
Long-term holder selling remains the key pressure point
The most important signal now comes from long-term Bitcoin holders, whose realized losses have risen sharply. Realized losses occur when coins move on-chain at prices below their previous acquisition price. When long-term holders begin realizing large losses, it often points to capitulation, a phase in which older holders sell after enduring a prolonged drawdown.
Current data shows that this capitulation phase is advanced but not complete. Long-term holders are responsible for 43% of all realized losses on the Bitcoin network, a high share that reflects stress among seasoned market participants. Adjusted realized-loss data, which removes internal transfers and better captures true selling activity, shows daily losses peaking at $280 million.
That level is notable because it is the highest since December 2022, when Bitcoin was emerging from one of the most severe bear-market phases in its history. However, analysts caution that the current episode differs in one important way: the latest wave of losses has not yet shown a sustained decline.
In previous bottoming phases, realized losses from long-term holders eventually began to shrink as selling pressure was absorbed. That reduction often marked the start of market exhaustion, when fewer holders were willing to sell at depressed prices. In the current cycle, losses remain elevated, suggesting that the market may still need more time before the supply overhang is fully cleared.
Bitcoin has traded below the average cost basis of active market participants since February 2026. That five-month stretch is historically consistent with early accumulation phases, when prices are weak but long-term buyers slowly begin to return. Still, analysts say the market has not produced the stronger confirmation usually needed to identify a completed bottom.
A short-term retest toward $53,000 cannot be ruled out if selling accelerates or demand remains weak. Such a move would not necessarily invalidate the broader bottoming structure, but it would extend the capitulation phase and likely delay any recovery above key realized-price levels.
Bitcoin remains below key cost benchmarks
Bitcoin’s current price sits far below two important on-chain measures: the realized market mean at $76,600 and the short-term holder cost basis at $72,200.
The realized market mean is often viewed as a broad measure of the average cost level across the market. When Bitcoin trades below this level for an extended period, it usually suggests that the asset is undervalued relative to the price at which coins last moved. The short-term holder cost basis tracks the average acquisition price of newer holders, who are generally more sensitive to price changes.
Trading below both levels shows that many recent buyers are underwater, while the broader market is still priced at a discount to realized value. Reclaiming these levels would be an important step toward restoring confidence.
The $72,200 short-term holder cost basis is especially important because it often acts as resistance during weak markets. When prices rise toward that level, traders who bought near the top may sell to break even. That behavior can create supply pressure and limit rallies unless demand is strong enough to absorb it.
The $76,600 realized market mean is the larger threshold. Analysts view a confirmed move above that level as one of the clearest signs that Bitcoin has moved out of deep-value territory and into a more durable recovery phase. Until then, rallies may remain vulnerable to fading momentum.
Etf flows show limited demand
Spot Bitcoin ETF flows have improved from their weakest levels but remain negative on a monthly basis. Daily outflows have slowed from the June peak of $193 million to about $88.9 million, but the continued net outflow shows that large pools of capital have not yet returned in force.
ETF trading volume has also fallen sharply. Daily turnover now ranges from $650 million to $950 million, about 80% below the October 2025 peak. Lower volume typically signals weaker participation, thinner conviction, and less urgency from institutional traders.
This matters because spot ETFs have become a major channel for Bitcoin demand. When ETF inflows are strong, they can absorb supply and support upward price momentum. When flows are weak or negative, the market must rely more heavily on direct spot buying and derivatives activity, which can be less stable.
The latest ETF data suggests that institutional participation remains uncertain. A few days of improved flows would not be enough to shift the broader trend. Analysts are watching for a sustained recovery in both inflows and trading volume before treating ETF demand as a reliable support for price.
Without stronger ETF activity, Bitcoin may remain dependent on on-chain supply exhaustion rather than fresh demand. That makes the decline in long-term holder selling even more important.
Derivatives traders are cautious but less bearish
Derivatives markets show a moderately more constructive tone. The put-to-call open interest ratio has fallen to 0.56, the lowest level of the year. A lower ratio means call options, which benefit from rising prices, have become more prominent relative to put options, which are often used for downside protection.
That shift suggests that some traders are positioning for a rebound. However, the broader derivatives market is not showing aggressive bullishness. Perpetual futures funding rates remain near neutral at about 0.01%, meaning long and short positions are relatively balanced.
Options pricing also shows that traders are still paying more for downside protection. The 25-delta skew held a 24% premium at the end of June, reflecting higher demand for bearish hedges than bullish exposure. This means traders may be willing to take selective upside positions, but they are not abandoning protection against another decline.
Bitcoin’s spot price is also about 6% below the options market’s “max pain” level near $66,000. Max pain refers to the price level where the largest number of options contracts would expire worthless. The gap is moderate compared with earlier drawdowns this year, suggesting that Bitcoin remains near the middle of its annual trading range rather than at an extreme.
Implied volatility has declined across shorter expirations, reducing hedging costs. The DVOL volatility index has fallen to a 12-month low, showing weaker demand for protective options. This does not mean risk has disappeared. Instead, it suggests that the market has entered a low-volatility phase, where traders expect smaller price swings unless a new catalyst emerges.
Macro conditions offer no clear signal
The macro environment remains difficult for Bitcoin and other risk assets. Rising oil prices have increased market tension, especially after reports that a U.S.-Iran memorandum of understanding had expired. Higher energy prices can raise inflation concerns, complicate central bank policy, and reduce appetite for volatile assets.
Bitcoin initially outperformed during the week, with gains reaching 9.4%, but momentum faded and the increase narrowed to around 5%. The pullback came as equity markets weakened, with the S&P 500 and major European benchmarks finishing the week in negative territory.
At the same time, liquidity signals are not uniformly bearish. U.S. M2 money supply has reached a record $22.8 trillion, which historically can support higher asset prices over time. More money in the financial system can improve liquidity and encourage risk-taking.
But the Federal Reserve’s reduced balance sheet and positive real interest rates continue to act as a restraint. With the balance sheet still $2 trillion below its 2023 high and real rates near 1%, monetary conditions remain tighter than they were during previous liquidity-driven crypto rallies.
That mixed backdrop leaves Bitcoin without a strong macro tailwind. The market is not facing a severe liquidity crunch, but it also lacks the easy-money conditions that often fuel major upside moves.
Recovery depends on three signals
Across on-chain, ETF, and derivatives data, Bitcoin appears to be in a late bear-market phase rather than a confirmed recovery. Prices remain deeply discounted, long-term holder losses are elevated, ETF activity is subdued, and derivatives traders continue to hedge against downside risk.
The market’s next major move is likely to depend on whether selling pressure from long-term holders begins to fade. A consistent decline in realized losses would suggest that capitulation is nearing exhaustion. That would remove one of the strongest forces holding Bitcoin below key cost levels.
A recovery in spot ETF flows would provide another important signal. Stronger inflows and higher trading volumes would show that institutional demand is returning, improving the chances that rallies can be sustained.
The final confirmation would be a reclaiming of the $76,600 realized market mean. Until Bitcoin moves back above that level and holds it, the market is likely to remain in deep-value territory, with rallies vulnerable to renewed selling.
For now, Bitcoin’s structure shows progress but not confirmation. The conditions for a bottom are forming, yet the market still needs evidence that forced selling has slowed, demand has returned, and key on-chain price levels have been recovered.
For deeper insight into ETF flows and macro drivers shaping Bitcoin’s next move, explore this ETF-focused guide today.
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